Emissions Trading Master Agreement

OPTIONS ANNEX

DATED AS OF: ……………………

BETWEEN

…………………………………………

("Party A")

AND

…………………………………………

("Party B")

IN RESPECT OF THE

EMISSIONS TRADING MASTER AGREEMENT

FOR THE EU SCHEME© v.3.0 2008

DATED AS OF: ……………………

This Options Annex supplements, forms part of, and is subject to the Agreement and is part of its Schedule 2.

The following is added as a new Part [3] to Schedule 2:

"Part [3] - Option Transactions

(a) The provisions of this Part [3] apply in respect of Option Transactions. Each Transaction between the Parties that is an Option Transaction will be automatically subject to the Agreement as modified by this Part [3] without any further action by the Parties, unless agreed upon terms of such Transaction expressly provide that it will not be.

(b) The Premium in respect of the purchase of an Option shall be paid by the Buyer to the Seller on the Payment Due Date in relation to the relevant Option Transaction. For the avoidance of doubt, all payments in relation to any Transaction deemed to be entered into pursuant to clause 5B (Effect of Exercise) will be made in accordance with the provisions of clause 8 (Billing and Payment) (to the extent that they do not relate to an Option Transaction).

"Delivering Party" means in respect of a Transaction that is (A) not an Option Transaction, the Seller; (B) an Option Transaction which is a Call Option, the Seller; or (C) an Option Transaction which is a Put Option, the Buyer.

"Receiving Party" means in respect of a Transaction that is (A) not an Option Transaction, the Buyer; (B) an Option Transaction which is a Call Option, the Buyer; or (C) an Option Transaction which is a Put Option, the Seller.

(d) A new clause 5A is added as follows:

"5A Exercise of Options.

5A.1 Where the Buyer exercises an Option, it may do so by giving notice within the Exercise Period for the relevant Option Transaction:

(a) in writing to the Seller in accordance with clause 14.5 (Notices); or

(b) orally to a representative of the Seller on a recorded telephone line (but not by a message left on a voicemail or other messaging system).

5A.2 Unless otherwise agreed by the Parties, a notice of exercise is effective in the case of an American Option, (A) if received by the Seller at or prior to 1600 hours on any Banking Day in the Exercise Period other than the Expiration Date, or (B) if received by the Seller at or prior to the Expiration Time on the Expiration Date, or (C) if received by the Seller after 1600 hours on any Banking Day other than the Expiration Date, as of 0900 hours on the next following Banking Day (if any) in the Exercise Period or, in the alternative, on the Expiration Date.

5A.4 The Buyer will, within three (3) Banking Days of exercising such Option by giving notice orally, confirm such exercise by written notice to the Seller in accordance with clause 14.5 (Notices). Any failure by the Buyer to send such written notice and/or any failure by the Seller to inform the Buyer of any inaccuracies in such written notice will not: (A) affect the validity or enforceability of the exercise of such Option or of the Allowance Transaction deemed to be entered into pursuant to clause 5B (Effect of Exercise); or (B) be a material breach of obligations under this Agreement under clause 12.2(c) (Events of Default).

5A.5 If the Parties agree that "Automatic Exercise" will apply in respect of an Option Transaction, then, unless the Seller is otherwise instructed by the Buyer at or prior to the Expiration Time in respect of an Option, that Option will have been deemed to have been exercised at the Expiration Time where the In-the-Money Amount payable to the Buyer equals or exceeds the product of (A) ten (10) percent (or such other percentage as may have been agreed by the Parties) of the Strike Price and (B) the CPTA Quantity.

5A.6 For the purposes of this clause 5A, "In-the-Money Amount" means:

(a) in the case of a Call Option, the amount, if any, by which (x) the product of the CPTA Quantity times the Reference Price exceeds (y) the product of the CPTA Quantity times the Strike Price; and

(b) in the case of a Put Option, the amount, if any, by which (x) the product of the CPTA Quantity times the Strike Price exceeds (y) the product of the CPTA Quantity times the Reference Price.

5A.7 Where the Option is not exercised or deemed to be exercised in accordance with this clause 5A by the Buyer at or prior to the Expiration Time on the Expiration Date, it will expire unexercised (except that any outstanding Premium will remain payable by the Buyer in accordance with clause 8 (Billing and Payment))."

(e) A new clause 5B is added as follows:

"5B Effect of Exercise

"5B.1 Upon the Buyer exercising an Option in accordance with clause 5A (Exercise of Options):

(a) the relevant Option Transaction will be terminated to the extent it relates to the Option (but without prejudice to any claim that the Seller may have in respect of any unpaid Premium or other amount relating to such Option Transaction); and

(b) the Parties will be deemed to have entered into a Transaction evidenced by and on the terms relating to the relevant Option that are set out in the part of the relevant Confirmation for such Option Transaction that relates to such Transaction."

(f) With respect to Option Transactions only, clause 8.2 (Statement) is amended by signing the statement to show:

(i) the Premium;

(ii) any amount owing from one Party to the other, including any amount owing by reason of clause 6 (Transfer Failure), 8.4 (Disputed Payments) or 12 (Termination), stating any part of that amount or any other amount that has already been paid or set off under clause 8.6 (Payment Netting);

(iii) the net amount payable from one Party to the other after taking into account all the matters set out above (the "Statement Amount"); and

(iv) VAT on the Premium and any other applicable amount payable under clause 7 (Value Added Taxes).

(g) The Parties agree that any Option Transaction entered into between them shall be substantially in the form of Confirmation for Option Transactions set out in the Options Annex and shall be incorporated in the Agreement as Schedule [3A] of the Agreement.

(h) The following definitions are added to Schedule 1:

(1) "American Option" means a style of Option that may be exercised at any point during an Exercise Period that consists of more than one day.

(2) "Bermudan Option" means a style of Option that may be exercised on certain days during an Exercise Period that consists of more than one day.

(3) "Call Option" means an Option Transaction entitling (but not obliging) the Buyer upon exercise to purchase Allowances from the Seller at the Strike Price per Allowance.

(4) "European Option" means a style of Option that may be exercised only during an Exercise Period that consists of one day.

(5) "Exercise Period" means: (A) in respect of an American Option, the period from and including 1000 hours to and including 1600 hours (or, in the case of the Expiration Date, to and including the Expiration Time) on all Banking Days from and including the Trade Date to and including the Expiration Date; (B) in respect of a Bermudan Option, the period from and including 0900 hours to and including 1600 hours on any Potential Exercise Day (or, in the case of the Expiration Date, to and including the Expiration Time); and (C) in respect of a European Option, the period from and including 0900 hours on the Expiration Date to and including the relevant Expiration Time.

(6) "Expiration Date" means the date on which an Option expires.

(7) "Expiration Time" means the time on an Expiration Date at which the Option expires, which will be 1600 hours.

(8) "Option" means a right but not an obligation to enter into a Transaction, which is given to an Buyer by way of an Option Transaction to enter into a Transaction in consideration of the payment of a Premium to the Seller, which Option may be an American Option, a Bermudan Option, or a European Option.

(9) "Option Transaction" means a Transaction between the Parties to enter into an Option Transaction, which, amongst other things, supplements the Agreement (or incorporates the terms of the Agreement by reference), and is identified in the related Confirmation as an Option Transaction or as otherwise being subject to the terms of this Part [3].

(10) "Potential Exercise Day" means, in respect of a Bermudan Option, each day that the Parties agree to be a day on which the Buyer may exercise the Option, each such date if not a Banking Day, the next following day that is a Banking Day, and the Expiration Date.

(11) "Premium" means the price (if any) to be paid by the Buyer in respect of the Option Transaction exclusive of VAT and other applicable Taxes.

(12) "Put Option" means an Option Transaction entitling (but not obliging) the Buyer upon exercise to sell Allowances to the Seller at the Strike Price per Allowance.

(13) "Reference Price" means the price or formula agreed between the Parties as the reference price, and if no such price or formula is specified, then the average of a quotation from each of three leading traders in the trading market for the relevant type of Allowances, as selected by the Buyer in good faith.

(14) "Strike Price" means in respect of an Option Transaction the price per Allowance specified or otherwise as determined in or pursuant to the relevant Confirmation.

IN WITNESS whereof the Parties have duly executed and delivered this Options Annex on the respective dates set out below with effect from the date set out on the first page of this document.

[Party A] [Party B]

By: By:

Name: [•] Name: [•]

Title: [•] Title: [•]

Date: [•] Date: [•]

APPENDIX 1 TO THE OPTIONS ANNEX:

FORM OF CONFIRMATION FOR OPTION TRANSACTIONS

SCHEDULE 3A
FORM OF CONFIRMATION FOR OPTION TRANSACTIONS

This Confirmation evidences the terms of the binding agreement between Party A and Party B regarding the Option Transaction described in Part A below, together with the terms and conditions of the Transaction described in Part B below, to be entered into in the event that the Buyer exercises its right under the Option Transaction.

This Confirmation evidences a Transaction under the Emissions Trading Master Agreement for the EU Scheme entered into between the Seller and Buyer dated as of [•] (the "Agreement").

This Confirmation is subject to, supplements and forms part of the Agreement.

PART A:
Seller and contact person:
Buyer and contact person:
Date and Time Transaction Agreed:
Option Style: / American / Bermudan / European
Option Type: / Put / Call
Expiration Date(s):
Expiration Time: / [XX:XX in 24-hour format], [location] time] / [In accordance with the Options Annex to Schedule 2 of the Agreement]
Potential Exercise Dates (Bermudan options only):
Automatic Exercise: / Will not apply unless otherwise specified here:
Premium:
Premium Payment Date: / As specified in Schedule 2 of the Agreement, or if different, as follows:
Reference Price:
PART B:
Buyer's Holding Account(s): / As specified in Schedule 2 of the Agreement, or if different, as follows:
Account Details (e.g. account number and name of relevant Member State Registry)
(1) [•]
(2) [•]
(3) [•]
(4) [•]
(5) [•]
Seller's Holding Account(s): / As specified in Schedule 2 of the Agreement, or if different, as follows:
Account Details (e.g. account number and name of relevant Member State Registry)
(1) [•]
(2) [•]
(3) [•]
(4) [•]
(5) [•]
Buyer's Delivery Banking Day Location: / As specified in Schedule 2 of the Agreement, or if different, as follows:
Seller's Delivery Banking Day Location: / As specified in Schedule 2 of the Agreement, or if different, as follows:
Allowance Type (EU Allowance / Alternative Allowance / CER / ERU):
Specified Compliance Period(s):
CPTA Quantity (for each Specified Compliance Period) (expressed in number of Allowances):
Delivery Date (for each CPTA Quantity):
Strike Price(s): / [•] (€ / Allowance) for each Specified Compliance Period
Total amount:
Payment Date:
Name of Broker (if applicable):
Bank details: / As specified in Schedule 2 of the Agreement, or if different, as follows:
Seller:
Buyer:
Netting of physical delivery obligations: / The Registry(ies) applicable to the Parties for the purposes of physical netting of deliveries under clause 8.7 (Physical Netting of Deliveries) are as specified in Schedule 2 of the Agreement, or if different, as follows:
Party A is (are): ; and
Party B is (are): .
Special Conditions:

Additional Terms:

1. Definitions. Capitalized terms not defined in this Confirmation have the meaning given to them in the Agreement.

2. Counterparts. This Confirmation may be executed and delivered in counterparts with the same effect as if both Parties had executed and delivered the same copy, and when each Party has signed and delivered a counterpart, all counterparts together constitute one agreement that evidences a binding supplement to the Agreement. Delivery of a copy of this Confirmation by facsimile is good and sufficient delivery.